Netflix Inc. has vowed to clamp down on password sharing as it looks to improve its financial fortunes, and the company just shared more details about how it will do that.
The company plans to make customers in several Latin American markets start paying extra if they want to add additional homes to their Netflix NFLX, +4.21% accounts, according to a recent blog post. A traditional subscription will give viewers the ability to watch Netflix in one designated home, but subscribers will need to pay an additional $2.99 for each new home in which someone would be streaming through a given Netflix account.
Earnings preview: Netflix is pulling out all the stops to reverse a slide in subscribers.
Netflix’s stock rallied 1.8% toward a six-week high in morning trading Tuesday, ahead of second-quarter results scheduled for release after the closing bell.
The $2.99 fee applies to viewers in the Dominican Republic, El Salvador, Guatemala, and Honduras. The cost will be 219 Pesos per additional home in Argentina. Those on Netflix’s basic plan can add one extra home, while those on standard plans can add two extra homes and those on premium plans can add three, per the post.
Netflix says that travel is “included” in this new system, as viewers can use tablets, laptops, or mobile devices to watch the streaming service while away from home. The company didn’t immediately respond to a MarketWatch request for comment about the logistics of watching Netflix on a TV set at a hotel, Airbnb, or vacation home.
“It’s great that our members love Netflix movies and TV shows so much they want to share them more broadly,” the company said in the post. “But today’s widespread account sharing between households undermines our long term ability to invest in and improve our service.”
The company also said it was “carefully exploring different ways for people who want to share their account to pay a bit more.”
It’s possible that the Latin America test could spread to more markets if it achieves the desired effects.
While the streaming giant saw a rush of new subscribers in the early days of the pandemic, it has struggled to show growth more recently and even posted a loss of subscribers during its first quarter.
Netflix’s stock has tumbled 44.2% over the past three months, while the S&P 500 index SPX, +2.14% has declined 12.8%.
Netflix is also looking beyond the password-sharing crackdown as it seeks to up its subscriber pool. The company intends to add an advertising-supported tier and recently announced it would partner with Microsoft Corp. MSFT, +1.36% on the endeavor.
The company has also tried splitting up the seasons of popular shows, which could help prevent subscribers from “churning,” or canceling their subscriptions after they’ve already watched their chosen programs.